PEOPLES BANCORP INC

Peoples reported net income of $29.0 million for the first quarter of 2026, representing earnings per diluted common share of $0.81. In comparison, Peoples reported net income of $31.8 million, representing earnings per diluted common share of $0.89, for the fourth quarter of 2025, and net income of $24.3 million, representing earnings per diluted common share of $0.68, for the first quarter of 2025. Non-core items negatively impacted earnings per diluted common share by $0.01 for the first quarter of 2026, $0.04 for the fourth quarter of 2025, and $0.01 for the first quarter of 2025.

Net interest income was $90.4 million for the first quarter of 2026, a decrease of $0.6 million when compared to the linked quarter. Net interest margin was 4.16% for the first quarter of 2026, compared to 4.12% for the linked quarter. The decrease in net interest income was primarily driven by a decrease in accretion income coupled with fewer days in the quarter compared to the linked quarter. The increase in net interest margin was driven by a reduction in deposit costs. Net interest income for the first quarter of 2026 increased $5.2 million, or 6%, compared to the first quarter of 2025. Net interest margin increased 4 basis points when compared to the first quarter of 2025. The increase in net interest income compared to the first quarter of 2025 was driven by lower deposit and borrowing costs.

Accretion income, net of amortization expense, was $1.3 million for the first quarter of 2026, $1.8 million for the fourth quarter of 2025 and $3.5 million for the first quarter of 2025, which added 6 basis points, 8 basis points and 17 basis points, respectively, to net interest margin. The decrease in accretion income for the first quarter of 2026 when compared to the first quarter of 2025 was driven by less accretion recognized in the current period from the 2023 merger with Limestone Bancorp, Inc. ("Limestone Merger").

The provision for credit losses was $9.7 million for the first quarter of 2026, compared to a provision for credit losses of $8.1 million for the linked quarter and a provision for credit losses of $10.2 million for the first quarter of 2025. The provision for credit losses for the first quarter of 2026 was primarily driven by net charge-offs and a deterioration in the economic forecasts used within the CECL model. The provision for credits losses for the linked quarter was primarily driven by (i) net charge-offs, (ii) loan growth, and (iii) a slight deterioration in the economic forecasts used within the CECL model, partially offset by reductions in reserves for individually analyzed loans and leases. The provision for credit losses for the first quarter of 2025 was primarily driven by net charge-offs. Net charge-offs for the first quarter of 2026 were $6.6 million, or 0.40% of average total loans annualized, compared to net charge-offs of $7.4 million, or 0.44% of average total loans annualized, for the linked quarter and net charge-offs of $8.1 million, or 0.52% of average total loans annualized, for the first quarter of 2025. For additional information on credit trends and the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" section below.

Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the first quarter of 2026 was $0.4 million, compared to a net loss of $2.0 million for the linked quarter and a net loss of $0.4 million for the first quarter of 2025. The net losses for the first quarter of 2026 and for the first quarter of 2025 were driven by losses on repossessed assets. The net loss for the linked quarter was driven by a $0.9 million net loss on the sale of an OREO property and a $0.8 million loss on the redemption of subordinated debt.

Total non-interest income, excluding net gains and losses, for the first quarter of 2026 increased $0.4 million compared to the linked quarter. The increase in non-interest income, excluding net gains and losses, was primarily impacted by an increase of $1.1 million in insurance income, driven by annual performance-based commissions typically received in the first quarter of each year, partially offset by a decrease of $0.4 million in electronic banking income and $0.4 million in deposit account service charges, which are seasonally higher in the fourth quarter of each year. Compared to the first quarter of 2025, total non-interest income, excluding net gains and losses, increased $1.2 million, due to an increase of $1.1 million in lease income, driven by an increase in operating lease income, and an increase of $0.5 million in trust and investment income, which was driven by an increase in assets under administration and management, partially offset by a decrease of $0.5 million in insurance income, driven by lower annual performance-based commissions.

Total non-interest expense increased $0.3 million for the three months ended March 31, 2026, compared to the linked quarter. The increase in total non-interest expense was primarily due to increases of $0.7 million in salaries and employee benefit costs, driven by up-front expense on stock grants to retirement-eligible employees and employer health savings account contributions, $0.3 million in operating lease expense, and $0.2 million in net occupancy and equipment expense. These increases were partially offset by decreases of $0.5 million in amortization of other intangible assets and $0.4 million in professional fees, driven by lower legal expenses.

Compared to the first quarter of 2025, total non-interest expense increased $0.8 million, or 1%. The increase in total non-interest expense was primarily driven by increases of $0.8 million in operating lease expense, $0.6 million in net occupancy and equipment expense, driven by higher property taxes, and $0.5 million in data processing and software expense, due to costs associated with recent technology projects, partially offset by a decreases of $0.5 million in amortization of other intangible assets and $0.5 million in other non-interest expense, driven by lower corporate expenses.

The efficiency ratio for the first quarter of 2026 was 58.6%, compared to 57.8% for the linked quarter and 60.7% for the first quarter of 2025. The efficiency ratio increased slightly compared to the linked quarter mainly as the result of higher non-interest expense, driven by increased salaries and employee benefits costs.

Peoples recorded income tax expense of $8.3 million with an effective tax rate of 22.3% for the first quarter of 2026, compared to income tax expense of $6.2 million with an effective tax rate of 16.4% for the linked quarter, and income tax expense of $7.0 million with an effective tax rate of 22.4% for the first quarter of 2025. The increase in income tax expense and the effective tax rate when compared to the linked quarter was impacted by updates to state apportionment in the fourth quarter of 2025, reducing expense by $0.9 million, and a $0.7 million benefit relating to tax credits purchased in the linked quarter. The increase in income tax expense when compared to the quarter ended March 31, 2025 was driven by higher pretax income.

Total assets were $9.65 billion as of March 31, 2026, $9.65 billion at December 31, 2025, and $9.25 billion at March 31, 2025. Total assets at March 31, 2026 remained flat when compared to at December 31, 2025 due to an increase in total loan and leases largely offset by a decrease in total investment securities. Total assets at March 31, 2026 increased compared to at March 31, 2025 due to increases of $341.7 million in total loans and leases and $83.1 million in total investment securities.

Total liabilities were $8.43 billion at March 31, 2026, down slightly from $8.44 billion at December 31, 2025, and up from $8.11 billion at March 31, 2025. The decrease in total liabilities when compared to at December 31, 2025 was primarily due to a decrease of $24.4 million in short-term borrowings and a decrease of $18.7 million in long-term borrowings, partially offset by an increase of $38.2 million in period-end total deposits. The increase in total liabilities when compared to at March 31, 2025 was primarily due increases of $486.6 million in short-term borrowings, partially offset by a decrease of $86.3 million in period-end deposits. The decrease in total deposits was primarily driven by a decrease of $196.4 million in brokered deposits, partially offset by increases of $60.2 million in non-interest bearing deposits, $24.7 million in interest-bearing demand accounts, and $24.0 million in savings accounts.

Total stockholders' equity at March 31, 2026 increased $9.4 million compared to at December 31, 2025, which was primarily due to net income for the quarter of $29.0 million, partially offset by dividends paid of $14.7 million and an increase of $5.4 million in accumulated other comprehensive loss. Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $76.4 million and $71.0 million at March 31, 2026 and at December 31, 2025, respectively. Total stockholders' equity at March 31, 2026 increased by $78.2 million compared to at March 31, 2025 and was impacted by net income of $111.4 million in the last twelve months and a decrease in accumulated other comprehensive loss of $19.6 million, partially offset by dividends paid of $58.6 million.